Kenyan Stock Markets Suffer As Violence Over Tax Bill Creates Volatility

Kenya is one of the rare exceptions on the African continent, especially in tumultuous East Africa. This is because Kenya has remained the beacon of democracy and stability. This factor, in turn, has helped foster businesses as well. The recent developments surrounding the tax bill and the violence have led to some instability.

Kenyan Markets Suffer

The Kenyan stock markets, that is, the Nairobi Stock Exchange, indices suffered major setbacks. On Tuesday, June 25, the NSE (Nairobi Stock Exchange) All Share Index dropped a significant 1 per cent or 111.76 points.

Other indices also suffered significantly, with the NSE 20 Share Index suffering a mammoth 15.02 per cent or 1,711.94 points. Another index, the NSE 25 index, dropped by 2,888.68 points or 37.74 per cent. The market capitalization also dropped by 15.66 per cent.

The protests have made the paradigm jittery. The protests emerged from the new taxation bills that were passed by the ruling government. According to reports, this tax bill will impose a 16 per cent tax on goods and services for direct and exclusive use in the construction and arming of specialised hospitals.

This could push healthcare costs upward. The bill also reaches businesses directly through import taxes, as it proposes increasing import taxes from 2.5 per cent to 3 per cent, affecting many businesses, given an under-developing country like Kenya would rely on imports from other nations.

Kenyan Shilling Closes at 128.50

Initially, the government had proposed a 16 per cent sales tax on bread. In addition, it also proposed a 25 per cent duty on cooking oil. These were, however, dropped owning to stiff opposition.

Some of the companies that suffered because of this decline was Kapchorua Tea Co. Ltd, which declined by 2.17 per cent or 1300 points, closing at 270.25 Kenyan Shilling. Another company that ended the proceeding in red was Sasini Ltd, who saw their value drop by 0.79 per cent, closing at 18.85 Kenyan Shilling.

The Kenyan Shilling closed at 128.50 against the US Dollar.